I recently used the Let Property campaign for a new client who wanted to disclose 4 years worth of untaxed property income. One buy to let with a mortgage so we weren’t talking a lot of unpaid tax. This is the first time we had used this process because previously we had always just written and asked for tax returns to be issued for previous years. In most cases if the amounts are modest, we have found that no penalties are raised anyway doing it that way.
To my dismay, despite HMRC advertising these campaigns as the most favourable way for a taxpayer to come forward and disclose untaxed income, in this client’s case, despite a number of attempts we were unable to get HMRC to remove the penalties they added as part of the process. Had we just gone about it using tax returns, our client would therefore have been likely to be better off given previous experiences. How is that treating all taxpayers equally and fairly?
Then a few weeks later, another client contacted me regrading 3 years worth of unpaid child benefit charges. In this case, HMRC had prompted the taxpayer to come forward and pay the charge. Yet, no penalties were made despite the taxpayer failing to make a disclosure themselves. The amount they owed back to HMRC was more than the tax my previous client owed for the undisclosed property income, yet they got stung with a series of penalties. Again, how is this treating all taxpayers equally and fairly?
Given this experience, I’ll never use the “campaigns” process again. What are the experiences and thoughts of others and do you think there is any way for our client to come back from these penalties given that they have now signed an offer which has been accepted?